Shoppe: Simplifying multi-level marketing

By starting his own business Ryan Frahm found a way to not only help his wife but also fulfill a lifelong dream.

Frahm founded Shoppe—an Ames-based monthly subscription service for anyone working for a multi-level marketing company to sell their product online—with his brother Derek on May 29, 2016.

It was an idea to help his wife, who is a consultant for LuLaRoe—a designer and seller of women’s clothing that uses a multi-level marketing model to distribute products.

Ryan says she would host anywhere from one to seven LuLaRoe online selling parties a week and for each party, she would create Facebook albums full of pictures of clothing products that would be for sale. People would then comment “sold” on an item they wanted, but his wife would need to check each photo to see which ones had sold.

“She would spend all her time uploading,” Frahm says. “And you have to upload them every single time, then take them down. It’s just a nightmare.”

And because Frahm, 27, was working as a software developer at Iowa State University, he understood how to build an online platform.

“I knew enough to be dangerous,” Frahm says. “It kind of irked me, and it irked me enough to start thinking about what’s an alternative. And the reason there wasn’t an alternative up to that point was because multi-level marketing companies have restrictions on how you can sell online.”

“So I got so frustrated that I came up with a way to sell online outside of Facebook, that still aligned with their rules.”

After two months of development, Shoppe launched with 15 initial users.

“We solved a problem,” Frahm says. “You can create new popups, which is like time-based sales parties that have a unique URL that you can copy and drop into your Facebook group or whatever. It’s really versatile.”

Facebook helped Shoppe, unintentionally

Frahm said over the first two months Shoppe saw consistent growth but a 36 hour period in August of 2016 helped take the startup to the moon.

“Facebook started locking accounts for thousands of consultants because they were selling through Facebook albums and up to that point, their policy on you using their platform to sell without paying them was kind of sketchy,” Frahm explains.

So when thousands of consultants got their accounts locked, they needed a way to sell their products.

“One of the great things about the multi-level marketing space is the word of mouth marketing that occurs,” Frahm says. “So when one thing is working, everybody around them wants to be apart of it.”

Because Shoppe allowed consultants to sell outside of Facebook and still be within the rules, their userbase quadrupled in a few days.

“We just went to the moon,” he says. “It’s been consistent ever since.”

Shoppe surpassed $1.5 million in annual recurring revenue in 2016 and has nearly 25,000 total sellers. And Shoppe has almost 1.2 million buyers because each buyer signs into the system to track and manage their orders, similar to eBay.

Being an entrepreneur is in the family blood

“We grew up always talking about doing something together,” Ryan says. “We would constantly talk about what we need to do to make this happen. We’re best friends.”

Frahm grew up in Omaha and moved to Walnut in Southwest Iowa. He said his dad was a small business owner and his mom worked out of their house for a bank.

He credits Iowa State University and the Industrial Engineering Program for not only teaching him how to solve problems but learning to make decisions on the types of solutions and whether or not they pay off.

“A big part of being an entrepreneur is you have to be willing to go get it and be willing to take those risks,” Frahm says. “I can’t believe that I potentially found a long-term thing so soon. It’s been the hardest thing I’ve ever done in my life.”